Advisers have cautiously welcomed the chancellor’s £2bn jobs creation scheme as a “very positive” move for the industry while raising red flags over a potential lack of linked training and capacity for abuse.
In his Summer Statement today (July 8), Rishi Sunak announced a £2bn job creation scheme as part of his attempts to keep the UK economy afloat in the aftermath of the coronavirus crisis.
The policy — which aims to help the UK’s young workers find employment in a potentially jobless market — will pay the wages of 16-24 year old at risk of unemployment for six months, essentially creating a free pool of labour for companies.
Mr Sunak said: “We cannot lose this generation, so today I am announcing a Kickstart Scheme... to give people the best possible chance of getting on and getting a job.
"I urge every employer, big or small, national or local, to hire as many 'kickstarters' as possible."
There is no cap on the number of jobs available through the scheme, but businesses must show the jobs are additional roles, at least minimum wage and 25 hours per week.
It must also provide training and support to help the worker find a permanent job.
Employers can apply from next month and young people could be in their new roles from this autumn.
Positive steps
Some advisers thought the industry would welcome the scheme with “open arms”, claiming it could make a “big difference” to recruitment in financial advice.
Alan Chan, director at IFS Wealth and Pensions, said: “The financial services industry will welcome [the scheme] with open arms during these challenging times.
“The six-month period can be used as a probationary period to see if the individual is a good fit. A lot of us are working from home and it’s very difficult to see how you can train someone remotely...but the scheme will provide a testing ground for this and cover most of the cost.”
Joanna Leyden, director at Monument, agreed, adding there were “so many aspects to being a good adviser” which required a lot of resources for firms to provide effective training on, while Tim Morris, IFA at Russell and Co, said it could make a “big difference” to financial advice.
Mr Morris added: “While six months is nowhere near enough time to get diploma-qualified, it should allow them to sit a couple of exams and get a good feel for the role. That could be invaluable to the individual and the firm.”
The first six months was the “hardest time” for taking on a new starter as it was their least productive period, according to Darren Cooke, financial planner at Red Circle Financial Planning, so the scheme could support firms to “get over that hurdle”.
The importance of training
Others in the industry thought the scheme would be better suited for the advice market if it had structured training and apprenticeship linked to the process.
Paul Stocks, financial services director at Dobson and Hodge, said Mr Sunak’s jobs scheme could be “very positive” if it could “feed into apprenticeships for new advisers”, given there was also the financial cost of achieving the required qualifications.
Alan Lakey, director at Highclere Financial, agreed. He thought the scheme would only work for advice if it “fitted in” with the approved schemes from the Personal Finance Society.
As the scheme stands, by providing minimum wage, it was “certainly not going to entice graduates”, Mr Lakey said.
These feelings were echoed by the industry’s professional body, the Personal Finance Society.
Chief executive of the PFS, Keith Richards, said: “Since financial services is a profession, it requires a structured career plan covering several years.
“The job creation scheme must therefore be properly integrated with other initiatives, such as apprenticeships for example, to ensure that there is a clear pathway for young people from entering the profession through to achieving a licence so that they can practice as a fully competent professional.”
Open to abuse
Warnings were also sounded that companies may abuse the scheme, using the initiative to ditch older, more expensive staff members to recruit young, “free” employees.
Scott Gallacher, director at Rowley Turton, said: “We will see larger companies look at this and make someone on £20,000 redundant because they can pay young people minimum wage for free.
“From an adviser’s perspective, it would be especially bad if providers got rid of experienced admin people to recruit new employees who did not know the ropes.”
Although not concerned about abuse, Jason Hollands, managing director at Tilney, thought it would have “very little overall impact” on the financial advice sector.
Mr Hollands said most advice firms were small in size and were simply too engrossed in supporting their clients and revenues to look at new hires.
He added: “It takes time, as well as money, to take on [new staff] and develop them and the incentives being talked about are unlikely to cover the costs.”
imogen.tew@ft.com
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